UK Landlord Forum / Life

Ok here we go...

Im 27 years old, I own a 3 bedroom semi-detached in Southampton. No mortgage. Estimated value of property owned = £230k

I want to get in to property renovation wit the intent of quick re-sales.

Overheads would be low since I am a...

Plasterer / Electrician / Decorator / Plumber / Tiler

Ideally I want to sell my current home, and invest in a property of the same type but with a price guide of between 145k - 175k, renovate it and sell it again. Aiming to complete 5 houses per year or more if possible.

Ok so....

Is now a good time to do this, given my current financial situaton?

I'd really like to hear other peoples opinions on this plan or what they would do if they wanted a piece of the action and were in my positon right now...

I'm fed up with scaremongering by friends / family who watch too much Sky News and think it "isn't the right time". So it would be great to hear from some more informed people!!

Hey Crystral,

The time is always right to invest if you do quick turn arounds, in my opinion. You're always going to buy at market value, and if you add value to a property sharpishly, then you won't get affected by the market condition. It's like people who are selling to buy at the moment- they won't be affected by the market condition, because they're buying/selling at the same rate as the market condition.

Anyone could have made profit renovating a few years ago, now it really boils down to knowledge, which involves buying the right property, at the right price, and turning things around quickly. The key is working quickly, so you stay inline with the market.

The only factor which may affect you is th lack of buyers on the market. Approved Mortgage applications are at an all time low, so it would be in your best interest to do your research, and find an area where you know people are still buying.

If i had all your skills young lady i would have been doing house renos a long time ago,

Buy buy buy, if you get places moving in a short amount of time then go for it.  I think i would look to buy in the Shirley area of Southampton maybe Foyes corner,  i know a guy who has converted a house just of shirley high st and is renting out to some Poles.  Go for it.

Oh hi by the way

Hi Crystal,

Most definately now is the time to buy, buy, buy...but that said the key is buying at the right price.

DON'T buy at market value, buying at market value is dangerous in this market because your not protecting yourself from a further downfall in the market... There are so many great deals out there if you know how to find them, you don't need to buy at market value.

My second piece of advise would be this...DON'T SELL in this market.  Why would you given the state of it?  Wait until it picks up in two three years time or whenever.  Simply remortgage your added value and discount and put in a tenant.  The rental market is fantastic, a simple ad in the paper and I'm getting loads of calls and great rent and cashflow each month.

Furthermore, if you remortgage it's tax free! Because your flipping it will be income tax at whatever level your at, offer 40k 40% that is a serious chunk.

With the right knowledge you can make a killing but you have to be careful in this market and be clever. 

Again, Remember Your TAX   

In my humble opinion now is the time to buy!

Put in really stupid offers you will be amazed at how much people will come down if they want to sell. Just had an offer accepted of £250K for a 6 bed 2 bath house that was on the market for £315k in Feb 2008! Needs some work doing but thats £65 grand of asking. Now - I know that the asking is a crystal ball figure made up the the greedy estate agents but the surveyor will normall value at least 10 - 15% below the asking price especially now. Negotiate hard.

As previously stated dont forget about tax in your calculations.  The HMRC take a very dim view on continually buying and selling your main residences and are quick to act to get their pound of flesh, especially if they consider you to be property developing. You can save loads by doing stuff yourself BUT quick turn around is the key. Most B2L mortgage companies want the house in a rentable condition on completion but if it needs work you may have to 'pony up the dough' for the interim. CAlculate how much you will gain by getting  someone in to help with the work against the fact you have no tenants in paying the rent. Something that I have had to learn my self. Started out wanting to do everything to save money. Now getting trusted tradesmen in and negotiating hard. I use an Indian subcontractor who has taught me the art of Indian negotiation. At First price act like your entire family has been insulted. Bitch, grab your temples, suck your teeth and feign illness. THEN come back with a price that is really low! HAGGLE. I was quoted £2300 for a kitchen from a well known joinery firm. It was an excellent price till I heard my friend shout Indian. At that point I suggested that £1800 was a fairer price and that their main competitior would do it for less. They agreed straight away. I heard Indian again so I suggested a dish washer would be nice for the price along with all the soft close mechanisms. Agreed as well. Finally I asked if they still did the contractor screw sets. This was thrown in FOC retail £60. If you dont ask you wont get!

At the moment flipping houses is really bad - no money to buy so I would suggest renting. Do them upto an excellent standard using the well known Magnolia and white. Good quality furnishings (www.multifurnish.co.uk do some excellent products for delivery through the UK). Cost is more initially but the investment is worth it as the rental yields should be higher.

As Richard Branson says always the consider the down side - cover your back. Whilst using your unemcumbered house is a good idea just remember what could happen. If it goes nuts up you could lose the roof over your head.

Know your market and area. Start carefully and build from there. If you can buy property and still sleep at night you are more than half way there. I am pretty new to this myself but now is the time to buy.

Good luck

Jools

I'd say in the position you are in, I would definately do it, considering it is a buyers market atm.

However if you are planning to have a quick turn around and put it on the market sharpish I really wouldnt. Well saying that I am just about to put my house on the market! But id say you'd have to find the ideal house maybe with that something special and you would have to develop it properly (no usual p.d rubbish standard bathrooms or howdens 600 kitchen. hah. However even then property is taking long to sell even if you do have a great competively priced house.

So I would probably buy somewhere thats not in an awful condition and rent it out or live in it and then when you think the time is right, develop it next year.

mrad2001: can you explain this a bit more please

"Furthermore, if you remortgage it's tax free! Because your flipping it will be income tax at whatever level your at, offer 40k 40% that is a serious chunk.

With the right knowledge you can make a killing but you have to be careful in this market and be clever. 

Again, Remember Your TAX   "

How is it tax free if you remortgage??

Graham

When you remortgage you don't pay tax. Technically it is tax deferred, but tax free unless you sell. With regard tax. If you buy and sell properties the revenue class you as a trader and therefore the profits are added to your income for the year. So if you are a higher rate tax payer or near it, then the profits could push you into the higher rate band. Meaning you have a 40% tax liability plus the ni liability.

If you hold onto the property and rent it the revenue class you as an investor and you pay capital gains tax at 18% on any profits (this would include the amount drawn out) if you sell in the future. Also you would have your capital gains tax allowance to offset profits against.

Hope that helps

Chris

hi ,

        I don't think so its a good time to sell i must say if you wait 2 months more then it will b better for you as real estate business will b stable..